Rockwood Q3 net income falls 19% on weak Ti02 demand

25 October 2012 12:45  [Source: ICIS news]

LONDON (ICIS)--Rockwood Holdings’ third-quarter net income fell by 19% year on year to $61.6m (€47.4m) as a result of negative foreign currency translation issues and weak titanium dioxide (Ti02) demand, the US-based specialty chemicals company said on Thursday.

 Sales were also down 8.3% for the quarter, to $862.8m.

“As compared to the third quarter of 2011, our results were negatively impacted by foreign currency translation, which reduced net sales by $73m and adjusted EBITDA [earnings before interest, taxes, debt and amortisation] by $15m,” said Rockwood CEO Seifi Ghasemi.

Adjusted EBITDA for the company’s Ti02 division was down by 63.2% year on year to $27.6m as a result of “significantly” higher raw materials costs – primarily slag and ilmenite - and exacerbated by lower volumes and increased currency charges.

In response, Rockwood is to operate its Ti02 facilities at 65% of capacity or less during the fourth quarter, the company said.

Sales and earnings were also down for Rockwood’s performance additives and advanced ceramics business units, due to lower sales volumes.

EBITDA was flat for the company’s surface treatment business, as currency translation and a depressed European market offset higher prices and volumes in Asia and the US.

The company’s lithium business posted a stronger performance, with EBITDA increasing by 6.3% to $45.4m during the quarter compared to the same period in 2011.

“We continued to see improving net sales for our lithium and surface treatment products as a result of higher selling prices, and our medical ceramics business continued its growth,” Ghasemi added.

Net income was up slightly year on year for the nine months to the end of September, with Rockwood generating a total of $362.3m in 2012 compared to $348.4m over the same period in 2011.

“Since the outlook for the global economy is not clear, we will continue to focus on controlling our costs to maintain our profit margins and generate free cash. We expect demand for TiO2 products to remain weak in the fourth quarter. We expect demand for our lithium products and medical ceramics to continue to be strong,” Ghasemi added.

During the quarter, the company agreed to acquire Canadian company Talison Lithium, with the Canadian dollar (C$) 724m ($731m) transaction expected to close in December.

($1 = €0.77, $1 = C$0.99)

By: Tom Brown
+44 208 652 3214

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